Korea's First U.S. Investment Project Should Untangle Trade, Security Knots

The government has effectively finalized a gas-fired combined-cycle power project in Encinal, Texas, as the first project under its $350 billion investment package in the United States, and reported the decision to the ruling party and government officials behind closed doors. The Korea-U.S. Strategic Investment Steering Committee, the body that reviews investments in the United States, on the 7th approved the first power project, with total installed capacity of 6.3 gigawatts, and an operating agreement for the special purpose vehicle (I-SPV) that will carry out the investment. The project cost was raised to $22.3 billion from the $19.8 billion (about 26.7 trillion won) originally planned, partly accommodating a U.S. request for an increase. With negotiations on the first investment effectively entering their final stage, an official announcement this month now looks more likely, as Trade and Industry Minister Kim Jung-kwan had signaled. Japan, which pledged $550 billion in investment, already announced its first and second U.S. investment plans in February and March and is moving quickly on talks for a third project.

It is welcome news that the long-delayed first investment in the United States has finally broken through, at a time when the alliance has become tangled by delays in carrying out the investment pledge, the Coupang controversy and the question of support for the war in the Middle East. It could serve as a thread for unraveling a Korea-U.S. relationship that has been blocked by intertwined economic and security issues. President Donald Trump and his administration continue to air their grievances toward Korea openly while escalating pressure on trade and security. Washington has signaled "targeted semiconductor tariffs" aimed squarely at Samsung Electronics and SK hynix. It has also pressed Korea to expand its military role, following its request for troops to be sent to the Strait of Hormuz with an indirect argument that Korea should supply Cheongung-II interceptor missiles to Ukraine.

The government should use the Texas power project as leverage to ease the strained relationship with the United States and to avoid disadvantages in tariff negotiations. The National Assembly must also cooperate to ensure the official announcement proceeds without a hitch this month and that follow-up projects, including in nuclear power, move forward. Without smooth execution of the first investment project, it may prove difficult to fend off further trade demands from Trump and to defend the 15% tariff ceiling agreed last year. Solid economic cooperation could also become a breakthrough for security talks between the two countries, including the introduction of nuclear-powered submarines, which has run into difficulties in tandem with the Hormuz deployment issue, and the revision of the nuclear energy agreement. On the Hormuz question as well, the government must weigh a strategic and pragmatic judgment that protects both the national interest and the alliance, so that the clock of a firm Korea-U.S. alliance starts ticking again.